McDonnell v. State Farm Mutual Automobile Insurance Company

Summary

The Alaska Supreme Court affirmed rulings concerning an uninsured-motorist insurance dispute between Lori McDonnell and State Farm Mutual Automobile Insurance Company. The court held that Alaska's mandatory appraisal statute, AS 21.96.035, does not apply to personal injury claims, and addressed the enforceability and accrual of a contractual two-year limitation provision. The opinion also considered whether McDonnell's declaratory-judgment challenge was moot.

Holdings

1. AS 21.96.035 does not require appraisal of uninsured-motorist personal-injury claims; the statute applies to disputes over the value of losses to tangible property and similar property risks, not the value of choses in action such as personal-injury claims.
2. The three-year contract statute of limitations under AS 09.10.053 generally applies to uninsured-motorist claims because those claims arise from the insurance contract rather than directly from the underlying tort.
3. An uninsured-motorist claim generally accrues when the insurer allegedly breaches the insurance contract, such as by denying the claim or clearly refusing a demand for payment, rather than on the date of the accident.
4. State Farm's two-year contractual limitations provision is not wholly void as against public policy and may be enforced against uninsured-motorist claims only if State Farm demonstrates that it was prejudiced by the insured's delay in filing suit.
5. The policy provision cannot validly commence the two-year limitations period before the insured's uninsured-motorist cause of action accrues; the period begins when the insurer allegedly breaches the contract, including by refusing payment or denying the claim.
6. McDonnell's challenge to the enforceability of the two-year provision was not moot merely because she filed suit within two years; she sought a declaration that the provision was unenforceable and should not be required to violate the provision to obtain judicial review.

Questions Presented

1. Whether AS 21.96.035 requires appraisal of disputes concerning the value of uninsured-motorist personal-injury claims.
2. Whether McDonnell's challenge to the contractual two-year limitations provision was moot.
3. Whether the three-year contract statute of limitations generally applies to uninsured-motorist claims and when such claims accrue.
4. Whether State Farm's contractual two-year limitations provision is enforceable against uninsured-motorist claims, and whether it may commence before the insurer allegedly breaches the insurance contract.

Disposition

affirmed